Optimal size of the production run for this particular compound is to be calculated. Concept Introduction: Economic order quantity, often called EOQ refers to the order quantity that helps an organization to maintain its inventory level and to minimize holding and order cost for the organization’s business.

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Answer 1

Question

Chapter 4.6, Problem 17P

a.

Summary Introduction

Interpretation: Optimal size of the production run for this particular compound is to be calculated.

Concept Introduction:

Economic order quantity, often called EOQ refers to the order quantity that helps an organization to maintain its inventory level and to minimize holding and order cost for the organization’s business.

b.

Summary Introduction

Interpretation: Proportion of each production cycle that consist uptime and downtime is to be determined.

Concept Introduction:

Uptime refers to the ration of the total time during which the tools or machinery is operational. On the other hand downtime refers to the ratio of the total time during which the tools or machinery is non-operational.

c.

Summary Introduction

Interpretation: Average annual cost of holding and setup attributes to the given item along with the annual profit the company is realizing with the given item, if the compound sell become $3.90 is to be determined.

Concept Introduction:

Holding cost is related to the stored inventory which remains unsold. An organization’s holding cost is the cost of damaged or spoiled goods, labor, and space.

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The Wod Chemical Company produces a chemical compound that is used as a lawnfertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annualdemand for the compound is 0.6 million pounds per year. The fixed cost of settingup for a production run of the chemical is $1,500, and the variable cost of production is $3.50 per pound. The company uses an interest rate of 22 percent to accountfor the cost of capital, and the costs of storage and handling of the chemical amountto 12 percent of the value. Assume that there are 250 working days in a year.b. What proportion of each production cycle consists of uptime and what proportionconsists of downtime?

The Wod Chemical Company produces a chemical compound that is used as a lawnfertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annualdemand for the compound is 0.6 million pounds per year. The fixed cost of settingup for a production run of the chemical is $1,500, and the variable cost of production is $3.50 per pound. The company uses an interest rate of 22 percent to accountfor the cost of capital, and the costs of storage and handling of the chemical amountto 12 percent of the value. Assume that there are 250 working days in a year.c. What is the average annual cost of holding and setup attributed to this item? Ifthe compound sells for $3.90 per pound, what is the annual profit the companyis realizing from this item?

The Wod Chemical Company produces a chemical compound that is used as a lawnfertilizer. The compound can be produced at a rate of 10,000 pounds per day. Annualdemand for the compound is 0.6 million pounds per year. The fixed cost of settingup for a production run of the chemical is $1,500, and the variable cost of production is $3.50 per pound. The company uses an interest rate of 22 percent to accountfor the cost of capital, and the costs of storage and handling of the chemical amountto 12 percent of the value. Assume that there are 250 working days in a year.a. What is the optimal size of the production run for this particular compound?

Answer 2

Question

Chapter 4.6, Problem 17P

a.

Summary Introduction

Interpretation: Optimal size of the production run for this particular compound is to be calculated.

Concept Introduction:

Economic order quantity, often called EOQ refers to the order quantity that helps an organization to maintain its inventory level and to minimize holding and order cost for the organization’s business.

b.

Summary Introduction

Interpretation: Proportion of each production cycle that consist uptime and downtime is to be determined.

Concept Introduction:

Uptime refers to the ration of the total time during which the tools or machinery is operational. On the other hand downtime refers to the ratio of the total time during which the tools or machinery is non-operational.

c.

Summary Introduction

Interpretation: Average annual cost of holding and setup attributes to the given item along with the annual profit the company is realizing with the given item, if the compound sell become $3.90 is to be determined.

Concept Introduction:

Holding cost is related to the stored inventory which remains unsold. An organization’s holding cost is the cost of damaged or spoiled goods, labor, and space.

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Answer 3

Question

Chapter 4.6, Problem 17P

a.

Summary Introduction

Interpretation: Optimal size of the production run for this particular compound is to be calculated.

Concept Introduction:

Economic order quantity, often called EOQ refers to the order quantity that helps an organization to maintain its inventory level and to minimize holding and order cost for the organization’s business.

b.

Summary Introduction

Interpretation: Proportion of each production cycle that consist uptime and downtime is to be determined.

Concept Introduction:

Uptime refers to the ration of the total time during which the tools or machinery is operational. On the other hand downtime refers to the ratio of the total time during which the tools or machinery is non-operational.

c.

Summary Introduction

Interpretation: Average annual cost of holding and setup attributes to the given item along with the annual profit the company is realizing with the given item, if the compound sell become $3.90 is to be determined.

Concept Introduction:

Holding cost is related to the stored inventory which remains unsold. An organization’s holding cost is the cost of damaged or spoiled goods, labor, and space.

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Answer 4

Question

Chapter 4.6, Problem 17P

a.

Summary Introduction

Interpretation: Optimal size of the production run for this particular compound is to be calculated.

Concept Introduction:

Economic order quantity, often called EOQ refers to the order quantity that helps an organization to maintain its inventory level and to minimize holding and order cost for the organization’s business.

b.

Summary Introduction

Interpretation: Proportion of each production cycle that consist uptime and downtime is to be determined.

Concept Introduction:

Uptime refers to the ration of the total time during which the tools or machinery is operational. On the other hand downtime refers to the ratio of the total time during which the tools or machinery is non-operational.

c.

Summary Introduction

Interpretation: Average annual cost of holding and setup attributes to the given item along with the annual profit the company is realizing with the given item, if the compound sell become $3.90 is to be determined.

Concept Introduction:

Holding cost is related to the stored inventory which remains unsold. An organization’s holding cost is the cost of damaged or spoiled goods, labor, and space.

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Answer 5

Chapter 4.6, Problem 17P

a.

Summary Introduction

Interpretation: Optimal size of the production run for this particular compound is to be calculated.

Concept Introduction:

Economic order quantity, often called EOQ refers to the order quantity that helps an organization to maintain its inventory level and to minimize holding and order cost for the organization’s business.

b.

Summary Introduction

Interpretation: Proportion of each production cycle that consist uptime and downtime is to be determined.

Concept Introduction:

Uptime refers to the ration of the total time during which the tools or machinery is operational. On the other hand downtime refers to the ratio of the total time during which the tools or machinery is non-operational.

c.

Summary Introduction

Interpretation: Average annual cost of holding and setup attributes to the given item along with the annual profit the company is realizing with the given item, if the compound sell become $3.90 is to be determined.

Concept Introduction:

Holding cost is related to the stored inventory which remains unsold. An organization’s holding cost is the cost of damaged or spoiled goods, labor, and space.

Answer 6

Chapter 4.6, Problem 17P

a.

Summary Introduction

Interpretation: Optimal size of the production run for this particular compound is to be calculated.

Concept Introduction:

Economic order quantity, often called EOQ refers to the order quantity that helps an organization to maintain its inventory level and to minimize holding and order cost for the organization’s business.

Answer 7

Chapter 4.6, Problem 17P

a.

Summary Introduction

Interpretation: Optimal size of the production run for this particular compound is to be calculated.

Concept Introduction:

Economic order quantity, often called EOQ refers to the order quantity that helps an organization to maintain its inventory level and to minimize holding and order cost for the organization’s business.

Answer 8

b.

Summary Introduction

Interpretation: Proportion of each production cycle that consist uptime and downtime is to be determined.

Concept Introduction:

Uptime refers to the ration of the total time during which the tools or machinery is operational. On the other hand downtime refers to the ratio of the total time during which the tools or machinery is non-operational.

Answer 9

b.

Summary Introduction

Interpretation: Proportion of each production cycle that consist uptime and downtime is to be determined.

Concept Introduction:

Uptime refers to the ration of the total time during which the tools or machinery is operational. On the other hand downtime refers to the ratio of the total time during which the tools or machinery is non-operational.

Answer 10

c.

Summary Introduction

Interpretation: Average annual cost of holding and setup attributes to the given item along with the annual profit the company is realizing with the given item, if the compound sell become $3.90 is to be determined.

Concept Introduction:

Holding cost is related to the stored inventory which remains unsold. An organization’s holding cost is the cost of damaged or spoiled goods, labor, and space.

Answer 11

c.

Summary Introduction

Interpretation: Average annual cost of holding and setup attributes to the given item along with the annual profit the company is realizing with the given item, if the compound sell become $3.90 is to be determined.

Concept Introduction:

Holding cost is related to the stored inventory which remains unsold. An organization’s holding cost is the cost of damaged or spoiled goods, labor, and space.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 4.4 - Prob. 1P Ch. 4.4 - Prob. 2P Ch. 4.4 - Prob. 3P Ch. 4.4 - Prob. 4P Ch. 4.4 - Prob. 5P Ch. 4.4 - Prob. 6P Ch. 4.4 - Prob. 7P Ch. 4.4 - Prob. 8P Ch. 4.4 - Prob. 9P Ch. 4.5 - Prob. 10P

Solution Summary: The author explains that economic order quantity helps an organization to maintain its inventory level and to minimize holding and order cost for the organization's business.

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